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Prime Minister John Key has announced the government will throw out the controversial Section 92A of the Copyright Amendment (New Technologies) Act and start again.
Commerce and justice minister Simon Power will now meet with officials and rewrite Section 92A (S92) of the Act from the ground up.
"Section 92a is not going to come into force as originally written. We have now asked the minister of commerce to start work on a replacement section," the prime minister said.
No timeframe has been set for amending S92.
In a follow-up to Mr Key's Beehive press conferencing announcing the move, Mr Power released a statement saying:
"Allowing section 92A to come into force in its current format would not be appropriate given the level of uncertainty around its operation.
"This legislation was put in place to combat unlawful file-sharing which facilitates copyright infringement on a large scale ... While the government remains intent on tackling this problem, the legislation itself needs to be re-examined and reworked to address concerns held by stakeholders and the government."
S92 - which requires ISPs to have a code of practice to disconnect “repeat” copyright infringers - was due to go into force at the end of last month, but at the last minute was suspended by Prime Minister John Key until March 27.
Mr Key asked industry groups to come to a workable solution before that date.
Since then the Telecommunications Carriers Forum (TCF), representing all major ISPs, has being working on a draft code of practice, and discussing it with copyright holders, lead by Rianz (the Recording Industry Association of New Zealand).
The TCF’s effort was dealt a major blow on March 11 when TelstraClear bailed on the TCF talks, saying it was not its job to fix bad legislation.
TCF chief executive Ralph Chivers told NBR that given the key constraint the S92 working party was under - that all members had to agree on the code, in UN Security Council 100%-consensus-or- nothing style - “the document must now, by definition, fail”.
The failure to find consensus would mean that key S92 infrastructure - such as an independent moderator standing between ISPs and rights holders like Rianz who would lay complaints against their users - was now impossible, said Mr Chivers.
Earlier today, WorldXChange owner Paul Clarkin - a member of the TCF's working party - told NBR the ISP industry consensus was that S92 should be thrown out and rewritten from the ground up rather than be band-aided.